Fresh at Project Syndicate: Is Plutocracy Really the Problem?: The larger issue...is an absence of alternative voices. If the 2010s had been anything like the 1930s, the National Association of Manufacturers and the Conference Board would have been aggressively calling for more investment in America, and these arguments would have commanded the attention of the press. Labor unions would have had a prominent voice as advocates for a high-pressure economy. Both would have had very powerful voices inside the political process through their support of candidates. Did the top 0.01% put something in the water to make the media freeze out such voices after 2008?...

Smackdown: Failing to Do Robustness Checks Is Not a Virtue: This, from this past April of all times, greatly puzzles me: WHAT IN THE HOLY NAME OF THE ONE WHO IS IS GOING ON HERE?! Let us remember what really happened back in 2011 when the unemployment rate was 9%: "Reinhart... explained that countries rarely pass the 90 percent debt-to-GDP tipping point precisely because it is dangerous.... Reinhart and Rogoff... 'current debt trajectories are a risk to long-term growth and stability, with many advanced economies already reaching or exceeding the important marker of 90 percent of GDP'..." Yet there never was any "90 percent debt-to-GDP tipping point". Reinhart and Rogoff thought there was because they did not do any robustness checks of their data-analysis binning procedures. Perhaps an apology to the misled world should be a high priority? Perhaps it should be a higher priority than rants claiming that their critics like me—who were right—engaged in "years of mounting polemics against austerity policies, Keynesian dogma has become something close to a secular religion"?...

Hoisted from the Archives: Risks of Debt: The Real Flaw in Reinhart-Rogoff: A country that spends and spends and spends and spends and does not tax sufficiently will eventually run into debt-generated trouble.... But can this happen as long as interest rates remain low? As long as stock prices remain buoyant? As long as inflation remains subdued. My faction of economists—including Larry Summers, Laura Tyson, Paul Krugman, and many many others—believe that it will not...

Hoisted from the Archives: What Was the Point of Robert Woodward's "The Agenda"?: According to the Washington Post's headline writers (and according to pretty damn near everybody else who read The Agenda that I have talked to), Woodward's book tells the story of a president who (a) feels "blindsided" by their actions, (b) feels that the policies his administration is adopting means that he is losing his soul, (c) finds that the Republican Federal Reserve Chair's views are etching a deep impression on policy, (d) finds himself stuck with a "turkey" of an economic plan, (e) has advisors who fight fiercely in order to (f) control a wishy-washy president, and as a result (g) decision-making suffers and (h) clarity of vision is lost. Now I was there. (a) is simply wrong. (b) is sorta true, sorta false--Clinton was conflicted. (c) is true. (d) is false--it was a damned good economic plan. (e) is true. But (f) is false: wrestling intently and intelligently with hard choices does not make you the puppet of your advisors. (g) is wrong: the process produced a very good outcome. And (h) is wrong too. I want to set this out because in comments we have Bob Woodward claiming that his book was about... something else than the Washington Post headline writers who got the first excerpts from it and published them thought it was about...

Hoisted from July 3, 2008: Optimal Control: "Was the Federal Reserve too volatile and hair-trigger? Or was the ECB too sluggish?...

Note to Self: The establishment-survey payroll-employment numbers (red line) contain within them a guess as to how many newly-formed forms there are that have not yet caught up to and entered the payroll system. When a recession starts, that guess at the fudge factor can be way high. On the other hand, the household-survey employment numbers (blue line) has a lot more statistical noise in it...

Comment of the Day: Ronald Brakels: "If you record a bitch's new born puppy and then play that sound on a tape deck or other audio device the bitch will pick up that device and treat it like a pup. Dogs have about 2 billion plus neurons but this shows they are still very stupid. But no one seems to have a problem with this epic level of idiocy in our closest animal companions...

Comment of the Day: Charles Steindel: "Nothing at all wrong with Weller, really. The truly odd point appears to be how he got nominated. It seems that Trump was pleased that Jim Bullard, the president of the St. Louis Fed, voted to cut the funds rate at the last meeting, and offered Jim the slot. Bullard turned it down (no regional president would ever be included to accept a Board post other than Chair or Vice Chair; no more real power, combined with less pay and no staff) and suggested Weller. That's not the usual way these things get done...

Weekend Reading: Daniel Davies: One-Minute MBA: "The secret to every analysis I've ever done... has been, more or less, my expensive business school education.... Good ideas do not need lots of lies told about them in order to gain public acceptance. I was first made aware of this during an accounting class.... Fibbers' Forecasts Are Worthless. Case after miserable case after bloody case we went through, I tell you.... Not only that people who want a project will tend to make inaccurate projections about the possible outcomes of that project, but about the futility of attempts to "shade" downward a fundamentally dishonest set of predictions.... It's been shown time and again and again; companies which do not audit completed projects in order to see how accurate the original projections were, tend to get exactly the forecasts and projects that they deserve.... Next week, perhaps, a few reflections on why it is that people don't support the neoconservative project to bring democracy to the Middle East (a trailer for those who can't wait; the title is going to be something like 'If You Tell Lies A Lot, You Tend To Get A Reputation As A Liar'). Mind how you go...

A Year Ago on Equitable Growth: : Fifteen Worthy Reads from the Past Week or so: July 12, 2018: TOP MUST REMEMBER: Cory Doctorow: I Was Naive: "I've been thinking of all those 'progressive' Senators who said that... Jeff Sessions was a gentleman, honorable, decent—just someone whose ideas they disagreed with. They approved Sessions for AG on that basis, and he architected this kids-in-cages moment...

Liveblogging: The Anglo-Saxon Chronicle: Gregory, Augustine, and Ceolwulf: "A.D. 596. This year Pope Gregory sent Augustine to Britain with very many monks, to preach the word of God to the English people...

Liveblogging: The Anglo-Saxon Chronicle: Ceawlin and Friends: "A.D. 568. This year Ceawlin, and Cutha the brother of Ceawlin, fought with Ethelbert, and pursued him into Kent. And they slew two aldermen at Wimbledon, Oslake and Cnebba...

Liveblogging: The Anglo-Saxon Chronicle: The Holy Pope Gregory, and Columba: "A.D. 560. This year Ceawlin undertook the government of the West-Saxons; and Ella, on the death of Ida, that of the Northumbrians; each of whom reigned thirty winters...

Duncan Black: In The Old Times: "I'm not one to defend the Bush administration, but they did at least attempt to color inside the lines, if in garish bloody colors. I'm sure Yoo's torture memo was quite a marvel of legal reasoning that only someone who went to the best law school could come up with (our best laws schools are churning out sociopaths, but still). At this point, the Trump administration is just saying 'we are going to continue doing crimes and you can't stop us and hahaha you aren't even trying'...

Sam Dangremond: Ken Griffin's 238 Million NYC Penthouse Is Most Expensive Home in America: "The penthouse at 220 Central Park South... $238 million.... At 953 feet, the 79-story tower stands out along the Central Park South skyline. Griffin's penthouse—a combination of two units—encompasses approximately 24,000 square feet, according to the Wall Street Journal. The $238-million price tag dwarfs the previous record of $137 million, which hedge-fund manager Barry Rosenstein reportedly paid for a home in East Hampton...

Jared Bernstein: More Evidence–This Time from CBO... Higher (Even Much Higher) Minimum Wages Largely Do What They’re Supposed To Do: "Raising the federal minimum wage to 15 per hour by 2025 would lift the pay of 27.3 million workers—17 percent of the workforce—according to a new report from the Congressional Budget Office. It would raise the incomes of poor families by 5 percent and thus reduce the number of people in poverty by 1.3 million. Since these low-end gains would be partially financed out of profits, the increase in the wage floor would reduce inequality. CBO also estimates that '1.3 million workers who would otherwise be employed would be jobless in an average week in 2025'.... The report warns that some will be hurt by the increase, but the best research suggests their job-loss estimate may be too high. Moreover, even if they’re right, the ratio of helped-to-hurt is 21 (27.3m/1.3m)...

David Byrne and Carol Corrado: Accounting for Innovations in Consumer Digital Services: IT Still mMatters: "Accounting for innovations in consumer content delivery matters: The innovations boost consumer surplus by nearly 1,800 (2017 dollars) per connected user per year for the full period of this study (1987 to 2017) and contribute more than 1/2 percentage point to US real GDP growth during the last ten...

Back in our Equipment Investment And Economic Growth, Larry Summers and I thought we needed to make a big deal about dealing with spatial autocorrelation. It looks like we were very right: Morgan Kelly: The Standard Errors of Persistence: "A large literature on persistence finds that many modern outcomes strongly reflect characteristics of the same places in the distant past... unusually high t statistics... severe spatial auto-correlation.... We analyse 27 persistence studies in leading journals and find that in most cases if we replace the main explanatory variable with spatial noise the fit of the regression commonly improves; and if we replace the dependent variable with spatial noise, the persistence variable can still explain it at high significance levels.... The results of persistence studies, and of spatial regressions more generally, might be treated with some caution in the absence of reported Moran statistics and noise simulations...

Mike Konczal (2013): Reinhart-Rogoff A Week Later: Why Does This Matter?: "We are seeing subtle distancing by conservative writers on the Reinhart/Rogoff thesis.... Holtz-Eakin writes about Reinhart and Rogoff in National Review, but drops the 'canonical' status. Now they are just two random people with some common sense the left is beating up: 'In order to distract from the dismal state of analytic and actual economic affairs, the latest tactic is to blame... two researchers, Carmen Reinhardt and Kenneth Rogoff, who made the reasonable observation that ever-larger amounts of debt must eventually be associated with bad economic news...' That's not actually what they said, and if you read Holtz-Eakin in February Reinhart-Rogoff is sufficient evidence to enact the specific plans he wants. Now there's no defense of the 'danger zone' argument, just the idea that the stimulus failed. Retreat!... One thing about the 'cliff' metaphor is that there's no tradeoff that would make it acceptable.... There were numerous other ways of describing this scenario, either the technical 'nonlinearities' or the 'danger zone' of Holtz-Eakin just a few months ago. With the danger zone metaphor now out of play, perhaps economists can see the relevant trade-offs more clearly...

Paul Krugman: "Very good from @sjwrenlewis. The Trumpist right and its equivalents abroad can only gain power with the collaboration of the establishment right. No Trump without the cynicism of a McConnell and the cowardice of a Rubio. The one thing I think Simon may get wrong is suggesting that mainstream conservatives could have made different choices. Anti-immigrant hysteria and austerity mania weren't intellectual slips, they were part of a sustained strategy.... The mainstream conservative agenda has always been unpopular, and needed to be sold with racism and lies. At some point the right-wing elite was likely to lose control to someone who said the dogwhistles out loud, but that was a risk they needed to take...

Jan-Werner Müller: Populism and the People: "No right-wing populist has yet come to power anywhere in Western Europe or North America without the collaboration of established conservative elites. Farage... needed Michael Gove, Boris Johnson et al to assure voters that [Brexit] was a jolly good idea. Trump wasn’t elected as the leader of a spontaneous grassroots movement... [but] needed the support of Chris Christie, Rudy Giuliani, Newt Gingrich–all of whom vouched for him. What happened on 8 November 2016 can in one sense be explained in the most banal terms. Citizens who identify with the Republican Party came out and did what voters do on election day: they cast a ballot for their party. What took place was utterly normal, except that the candidate himself wasn’t quite so normal...

Barry Eichengreen: How the US Economy’s Luck Runs Out: "The weakness of wage growth is no mystery. Wage inflation is weak because labour-market slack remains greater than indicated by a 3.6 per cent headline official unemployment rate. Include also individuals with part-time and sporadic employment (“persons marginally attached to the labour force, plus total employed part time for economic reasons”), and unemployment rises to 7.1 per cent. Even now, in other words, not all those who dropped out of the labour force due to the Great Recession and the opioid crisis have dropped back in.... In addition, trade unions no longer force big US corporations to share their profits when the latter rise in expansions.... How might the current expansion end?... A geopolitical shock... the Trump Administration’s erratic foreign policies... a point where the reserve army of the unemployed is finally depleted and wages rise sharply.... What are odds of the expansion ending in the next year? Truth is that no one knows...

Michael Spence: The “Digital Revolution” of Wellbeing: "Exponential improvements in the power and utility of digital products can also be achieved at minimal cost. Today’s smartphones are more powerful than the supercomputers of the mid-1980s.... It is certainly possible that a 10,000-fold increase in computing power at negligible additional cost over the past 20 years has yielded minimal consumer benefits; but it is highly unlikely.... None of these gains is captured in national income accounts. That is not to suggest that we should scrap or revise GDP; but we do need to recognize its limitations. The problem with GDP is not that it is a poor measure of material wellbeing (setting aside distributional issues), but that it is incomplete. It does not include the increase in the scope of goods and services delivered at negative incremental cost, nor the non-material side of individual wellbeing or social progress more generally...

David Brooks's declaration that something called “cultural Marxism“ directly is now “the lingua franca of the economy“ was one of the weirdest throwaway lines of the past month. Why is David Brooks today repeating a Lyndon LaRouche talking point—a false talking point—from forty years ago? I know no group who seriously either call themselves or are fairly-described as "cultural Marxists". There are some critical theorists—but they are anti-Marxist. And their speech is in no wise the "lingua franca" of anyplace outside a few enclaves in sociology, rhetoric, and cultural studies departments. Where this came from was unclear to me—until I found Ben Alpers and this guy, a veteran of the Wikipedia edit wars: Russell Blackford (2015): “Cultural Marxism” and Our Current Culture Wars: “Richard R. Weiner... attributes the actual term ‘cultural Marxism’ to Trent Schroyer[‘s]... 1973 book The Critique of Domination... as a ‘crisis theory’ employed by the Frankfurt School of Marxist intellectuals... [and] other[s], such as György Lukács and Henri Lefebvre.... [Today] It is employed by extreme right-wing ideologues, such as Breivik, in grandiose theories that have little credibility, and it is used popularly in ways that show little understanding of its history or its original meaning...

Apropos of the Hayekian "the market knows many things that no individual knows": In the fifth century BC those casting the statue of Athena-Fighting-in-Front in Attica had no clue that the tin from which they made their bronze came from Cornwall; and those mining the tin in Cornwall had no clue that its highest-and-best market use would be to make a giant statue of Athens's patron goddess: James D. Muhly: Sources of Tin and the Beginnings of Bronze Metallurgy: "Herodotus: 'Of the extreme tracts of Europe towards the west, I cannot speak with any certainty; for I do not... know of any islands called the Tin Islands, whence the tin comes which we use.... I have never been able to get an eye-witness that there is any sea on the further side of Europe. Nevertheless, tin and amber do certainly come to us from the ends of the earth...

Tim Duy: Insurance Cut Still in the Works: "Employment... this latest report does not undo narrative that the labor market slowed in 2019.... May’s report delivered large downward revisions to previous months; there were no such countervailing upward revisions in June’s.... The June report looks like a good outcome around an underlying pace of growth that has slowed markedly since the final months of 2018. Weaker wage growth in recent months... fit nicely into the narrative that inflation concerns should really remain on the back burner.... Fed speak has been fairly light in recent weeks but what we have points toward a 25bp cut rather than the beginning of a series of cuts...

Duncan Black: Rich Men Behaving Criminally: "There are things 'everybody' 'knows' which is not quite the same thing as saying they actually know things, but if you are a billionaire with a plane nicknamed the Lolita Express and you hobnob with lots of other powerful people, they all 'know' even if they don't know and they hobnob anyway. Hobnob being the best case scenario. Also maybe don't hobnob with the guy who is known for barging into the changing room of the Miss Teen USA pageant. You never know what could happen if he isn't socially shunned! One would think the sex trafficking of minors would be a line for some, but, well...

Michael Jordan: Artificial Intelligence—The Revolution Hasn’t Happened Ye: "Just as humans built buildings and bridges before there was civil engineering, humans are proceeding with the building of societal-scale, inference-and-decision-making systems that involve machines, humans, and the environment. Just as early buildings and bridges sometimes fell to the ground—in unforeseen ways and with tragic consequences—many of our early societal-scale inference-and-decision-making systems are already exposing serious conceptual flaws. Unfortunately, we are not very good at anticipating what the next emerging serious flaw will be. What we’re missing is an engineering discipline with principles of analysis and design...

It's not "the market or the state"; it is, almost always, "the market and the state". A state that can enforce property rights is highly likely to be able to do a lot more useful things. A state that cannot do many useful things—one that is incompetent or corrupt—is highly likely to be unable to enforce the property rights that underpin markets either: Timothy Besley and Torsten Persson: The Origins of State Capacity: Property Rights, Taxation, and Politics: "'Policy choices' in market regulation and taxation are constrained by past investments in the legal and fiscal capacity of the state. We study the economic and political determinants of such investments and find that legal and fiscal capacity are typically complements. Our theoretical results show that, among other things, common interest public goods, such as fighting external wars, as well as political stability and inclusive political institutions, are conducive to building state capacity of both forms. Our preliminary empirical results uncover a number of correlations in cross-country data which are consistent with the theory...

U.C. Davis economic historian Eric Rauchway continues his long twilight struggle against the Obama administration's claims that it did better with its crises than FDR did with his in the Great Depression-ridden 1930s. I'm with Eric here: Roosevelt knew less about how the economy worked and what to do, yet in retrospect did much better given the state of things when he took office. He did not know what to do other than to try everything and reinforce success. He did not know what the New Deal would be. But he definitely knew that there would be a New Deal: Eric Rauchway: The New Deal Was on the Ballot in 1932: "During the 1932 campaign, Franklin Roosevelt explicitly committed himself to nearly all of what would become the important programs of the New Deal. In the months before his March 4, 1933, inauguration, he made his proposed policies even clearer. Yet many Americans have forgotten this clarity of purpose.... One historian [Roger Daniels] recently declared, 'The notion that when Franklin Roosevelt became president he had a plan in his head called the New Deal is a myth that no serious scholar has ever believed'. Outgoing president Herbert Hoover (and voters and politicians and diplomats at the time) knew better...

Duncan Black: "But Trump Was Always Like This": "Many people say Trump has not changed, that he was like this all of his life, and that the brain worms don't exist. 1990s Trump was a dumbass lying blowhard just like the current one, but he wouldn't have talked about George Washington and the airports...

The late and persistent apparent rise in margins pretty much everywhere in the U.S. economy is one of the most surprising things to happen in the past generation. I do not know anyone very confident they know why this has taken place, or what all of its implications are. But it does seem highly likely that it calls for tougher antitrust policy. Here we have some very smart words from a murderers' row of thoughtful experts: Jonathan B. Baker, Nancy L. Rose, Steven C. Salop, and Fiona Scott Morton: Five Principles to Guide Vertical Merger Enforcement: "Agencies should consider and investigate the full range of potential anti-competitive harms.... Agencies should decline to presume that vertical mergers benefit competition on balance in... oligopoly markets.... Agencies should evaluate claimed efficiencies resulting from vertical mergers as carefully and critically as they evaluate claimed efficiencies resulting from horizontal mergers.... Agencies should decline to adopt a safe harbor for vertical mergers, even if rebuttable.... Agencies also should consider adopting presumptions (rebuttable) that a vertical merger harms competition when certain factual predicates are satisfied...

The echoes of the 1930s appear to me to be getting stronger and stronger. Hannah Arendt—who did not show up in the United States until 1941—always thought we were better than we were, and are: more insulated from European nihilism: Charles Sykes: Some Thoughts on David French’s Thoughts: "This seems a good time to remind you to go get a copy of Hannah Arendt’s Origins of Totalitarianism, in which she describes the rise of fashionable cruelty among the intellectual elites of the 1930s. Arendt writes about how 'it seems revolutionary to admit cruelty, disregard for human values, and general amorality, because this at least destroyed the duplicity upon which the existing society seemed to rest. What a temptation to flaunt extreme attitudes in the hypocritical twilight of double moral standards, to wear publicly the mask of cruelty if everybody was patently inconsiderate and pretended to be gentle'...

Ok. But what drives these differential rates of return, anyway? And how much can this really approach the dream of taxing luck and inheritance rather than enterprise?: Fatih Guvenen: Use It Or Lose It: Efficiency Gains from Wealth Taxation: "When individuals differ from each other in the rate of return they earn... capital income and wealth taxes have opposite implications for efficiency as well as for some key distributional outcomes. Under capital income taxation, entrepreneurs who are more productive... pay higher taxes. Under wealth taxation, on the other hand, entrepreneurs who have similar wealth levels pay similar taxes regardless of their productivity.... A revenue-neutral tax reform that replaces capital income tax with a wealth tax raises average welfare by about 8% in consumption-equivalent terms.... The optimal wealth tax is positive, yields larger welfare gains than the tax reform, and is preferable to optimal capital income taxes.... Wealth taxes can yield both efficiency and distributional gains...

Rachael Meager: Understanding the Average Effect of Microcredit: "The idea that giving small loans to poor households would help them escape poverty was once considered so compelling that it won Mohammed Yunus the Nobel Peace Prize. The global microloan portfolio is now worth over 102 billion and is growing yearly (Microfinance Barometer 2017). Yet microcredit now enjoys so little support among academics and policymakers that the Washington Post recently felt the need to assure us that 'microcredit isn’t dead'.... To estimate how much the effect of microcredit varies across studies, and how uncertain we should be about the effect of expanding access to microloans in new settings, I perform a Bayesian hierarchical analysis of the microcredit literature (Meager 2019).... I find that, in general, the effects on these outcomes are likely to be small and uncertain, around 7% of the average control group’s mean outcome.... Overall, there is little evidence that microcredit harms borrowers as was feared by some of its critics, but there is also little evidence of the transformative positive effects initially claimed by its advocates...

Moving from correlation to causation is one of the most subtle and puzzling topics in social science. I think Judea Pearl is a genius, and this book is well worth reading. Andrew Gelman is right in that there is a lot to disagree with in Pearl's intellectual history—Pearl seems unable to give an even slightly charitable or generous reading of anybody else. But Andrew Gelman is also right that the meat of the book—the case studies and examples—"is great". And I at least think that Andrew Gelman is wrong in thinking that Pearl's writing on causal inference has little point. I believe Pearl's framework of confounders-colliders-mediators is of great help, at least to those of us whose thought is not as smart and subtle as Andrew Gelman's: Andrew Gelman: "The Book of Why" by Pearl and Mackenzie: "Pearl and Mackenzie’s book is really three books... an exposition of Pearl’s approach to causal inference... an intellectual history... a series of examples.... I have difficulty understanding the point of Pearl’s writing on causal inference.... About the intellectual history... I disagree with a lot of what Pearl says.... The examples in the book. These are great.... The examples are interesting and they engage the reader—at least, they engage me—and I think they are a big part of what makes the book work...

Arthur Eckstein: Mediterranean Anarchy, Interstate War, and the Rise of Rome: "The history of the next fifty years [after 390 BC] in Latium appears to be a repeat of the fifth century, with Rome fighting the same rivals for power in the same geographical realm as before (Aequi, Volsci, Latin and Etruscan city-states, primarily in Latium and extreme southern Etruria)—and with the same equivocal success. In the 350s the Romans were still fighting wars with Latin Tibur and Praeneste, only thirty miles away. The evidence of the second Ro- man treaty with Carthage (ca. 348 b.c.) shows a Rome that has not advanced the geographical scope of its power much beyond the first treaty with Carthage, 150 years previously: Roman power is still limited to Latium, and does not control all states even there (see Polyb. 2.24.5). As Oakley says, no state can have benefited much from having its city destroyed...

Very wise from Josh Barro: There’s No Need for the Senate to Confirm Anyone to the Fed: "Trump... says he will nominate Judy Shelton and Christopher Waller to... fill out the board.... Shelton... like Cain and Moore before her has traded in a long track record of hawkish gold-buggery for a new, dovish outlook that calls for the low interest rates President Trump wants. In 2015, she said low interest rates were 'making suckers out of savers'. Now, even though the economy has gotten stronger and the argument for low rates should have, if anything, gotten a little bit weaker, Shelton is suddenly an advocate of cutting interest rates to zero, in order to increase access to capital. Shelton’s flip-flop is, if anything, more egregious than Moore’s and Cain’s, because monetary policy is supposed to be an actual area of expertise for her. Art Laffer, to whom the president just awarded the Presidential Medal of Freedom, has been attacking the very concept of Federal Reserve independence.... Historically, Fed independence has been a bigger concern for conservatives than for liberals.... It is kind of funny that it is a Republican president and conservative economic pundits like Laffer and Moore who are urging politicization of the Fed.... But conservatives in the Senate have reasons to take a long view.... The best tool they have to protect the Fed from Trump is the one they have been using: Their authority to refuse to confirm his nominees.... The Fed Board can work just fine with only five members. So long as Trump is the person making nominations, there’s no reason to aim for seven...

The old "secular stagnation" of the 1930s and 1940s was a fear that the world was approaching satiation with respect to things that it would be profitable to build. The new "secular stagnation" is much more a fear of growing monopoly power and a growing desire for safety. It is thus a very different thing—or, rather, two different things happening alongside each other: Emmanuel Farhi and Francois Gourio: Accounting for Macro-Finance Trends: "Most developed economies have experienced large declines in risk-free interest rates and lacklustre investment over the past 30 years, while the profitability of private capital has increased slightly. Using an extension of the neoclassical growth model, this column identifies what accounts for these developments. It finds that rising market power, rising unmeasured intangibles, and rising risk premia play a crucial role, over and above the traditional culprits of increasing savings supply and technological growth slowdown...

Africa is the only region in which the number of people in dire poverty continues to increase. Can industrialization help? Maybe—but it may be too late for industrial firms to be a leading sector: Bright Simons: Africa’s Unsung “Industrial Revolution”: "There is an industrial revolution underway in sub-Saharan Africa’s most entrepreneurial economies—places such as Ghana, Uganda, Senegal, and Côte d’Ivoire... Alibaba industrialisation.... No one is entirely sure why protectionist and state-led industrial policies of the type described earlier seem to induce large-scale industrialisation in Vietnam, South Korea, and Taiwan but not in Nigeria, Laos, or Uzbekistan. Every theory adduced is racked with contradictions and does not survive granular examination.... Small and medium-sized Chinese suppliers provide major chunks of the industrial jigsaw and African hustlers and unconventional industrialists act as shuttle-brokers of the various factors of production between China and Africa.... Chinese SMEs are becoming sophisticated global opportunity hunters, ditching the somewhat passive role they played as cogs in the Western outsourcing wheel three decades ago.... tailoring solutions for individual African country terrains, complete with logistics, training, and support packages. The effects of the modular transformation of the African industrial sector, whilst subtle, are already fascinating: reassembled knockdown luxury cars in Ghana; cutting-edge clay brick kilns in Uganda; and milk-vending now a thing in Kenya...

John Serrati: _[Neptune's Altars: The Treaties between Rome and Carthage (509-226 B.C.)](https://delong.typepad.com/neptunes-altars.pdf" title="Neptunes-Altars.pdf)

Wikipedia: Diodorus Siculus: "He is known for writing the monumental universal history Bibliotheca Historica, much of which survives, between 60 and 30 BC. It is arranged in three parts. The first covers mythic history up to the destruction of Troy, arranged geographically, describing regions around the world from Egypt, India and Arabia to Europe. The second covers the Trojan War to the death of Alexander the Great. The third covers the period to about 60 BC. Bibliotheca, meaning 'library', acknowledges that he was drawing on the work of many other authors...

Comments

Fresh at Project Syndicate: Is Plutocracy Really the Problem?: The larger issue...is an absence of alternative voices. If the 2010s had been anything like the 1930s, the National Association of Manufacturers and the Conference Board would have been aggressively calling for more investment in America, and these arguments would have commanded the attention of the press. Labor unions would have had a prominent voice as advocates for a high-pressure economy. Both would have had very powerful voices inside the political process through their support of candidates. Did the top 0.01% put something in the water to make the media freeze out such voices after 2008?...

Smackdown: Failing to Do Robustness Checks Is Not a Virtue: This, from this past April of all times, greatly puzzles me: WHAT IN THE HOLY NAME OF THE ONE WHO IS IS GOING ON HERE?! Let us remember what really happened back in 2011 when the unemployment rate was 9%: "Reinhart... explained that countries rarely pass the 90 percent debt-to-GDP tipping point precisely because it is dangerous.... Reinhart and Rogoff... 'current debt trajectories are a risk to long-term growth and stability, with many advanced economies already reaching or exceeding the important marker of 90 percent of GDP'..." Yet there never was any "90 percent debt-to-GDP tipping point". Reinhart and Rogoff thought there was because they did not do any robustness checks of their data-analysis binning procedures. Perhaps an apology to the misled world should be a high priority? Perhaps it should be a higher priority than rants claiming that their critics like me—who were right—engaged in "years of mounting polemics against austerity policies, Keynesian dogma has become something close to a secular religion"?...

Hoisted from the Archives: Risks of Debt: The Real Flaw in Reinhart-Rogoff: A country that spends and spends and spends and spends and does not tax sufficiently will eventually run into debt-generated trouble.... But can this happen as long as interest rates remain low? As long as stock prices remain buoyant? As long as inflation remains subdued. My faction of economists—including Larry Summers, Laura Tyson, Paul Krugman, and many many others—believe that it will not...

Hoisted from the Archives: What Was the Point of Robert Woodward's "The Agenda"?: According to the Washington Post's headline writers (and according to pretty damn near everybody else who read The Agenda that I have talked to), Woodward's book tells the story of a president who (a) feels "blindsided" by their actions, (b) feels that the policies his administration is adopting means that he is losing his soul, (c) finds that the Republican Federal Reserve Chair's views are etching a deep impression on policy, (d) finds himself stuck with a "turkey" of an economic plan, (e) has advisors who fight fiercely in order to (f) control a wishy-washy president, and as a result (g) decision-making suffers and (h) clarity of vision is lost. Now I was there. (a) is simply wrong. (b) is sorta true, sorta false--Clinton was conflicted. (c) is true. (d) is false--it was a damned good economic plan. (e) is true. But (f) is false: wrestling intently and intelligently with hard choices does not make you the puppet of your advisors. (g) is wrong: the process produced a very good outcome. And (h) is wrong too. I want to set this out because in comments we have Bob Woodward claiming that his book was about... something else than the Washington Post headline writers who got the first excerpts from it and published them thought it was about...

Hoisted from July 3, 2008: Optimal Control: "Was the Federal Reserve too volatile and hair-trigger? Or was the ECB too sluggish?...

Note to Self: The establishment-survey payroll-employment numbers (red line) contain within them a guess as to how many newly-formed forms there are that have not yet caught up to and entered the payroll system. When a recession starts, that guess at the fudge factor can be way high. On the other hand, the household-survey employment numbers (blue line) has a lot more statistical noise in it...

Comment of the Day: Ronald Brakels: "If you record a bitch's new born puppy and then play that sound on a tape deck or other audio device the bitch will pick up that device and treat it like a pup. Dogs have about 2 billion plus neurons but this shows they are still very stupid. But no one seems to have a problem with this epic level of idiocy in our closest animal companions...

Comment of the Day: Charles Steindel: "Nothing at all wrong with Weller, really. The truly odd point appears to be how he got nominated. It seems that Trump was pleased that Jim Bullard, the president of the St. Louis Fed, voted to cut the funds rate at the last meeting, and offered Jim the slot. Bullard turned it down (no regional president would ever be included to accept a Board post other than Chair or Vice Chair; no more real power, combined with less pay and no staff) and suggested Weller. That's not the usual way these things get done...

Weekend Reading: Daniel Davies: One-Minute MBA: "The secret to every analysis I've ever done... has been, more or less, my expensive business school education.... Good ideas do not need lots of lies told about them in order to gain public acceptance. I was first made aware of this during an accounting class.... Fibbers' Forecasts Are Worthless. Case after miserable case after bloody case we went through, I tell you.... Not only that people who want a project will tend to make inaccurate projections about the possible outcomes of that project, but about the futility of attempts to "shade" downward a fundamentally dishonest set of predictions.... It's been shown time and again and again; companies which do not audit completed projects in order to see how accurate the original projections were, tend to get exactly the forecasts and projects that they deserve.... Next week, perhaps, a few reflections on why it is that people don't support the neoconservative project to bring democracy to the Middle East (a trailer for those who can't wait; the title is going to be something like 'If You Tell Lies A Lot, You Tend To Get A Reputation As A Liar'). Mind how you go...

A Year Ago on Equitable Growth: : Fifteen Worthy Reads from the Past Week or so: July 12, 2018: TOP MUST REMEMBER: Cory Doctorow: I Was Naive: "I've been thinking of all those 'progressive' Senators who said that... Jeff Sessions was a gentleman, honorable, decent—just someone whose ideas they disagreed with. They approved Sessions for AG on that basis, and he architected this kids-in-cages moment...

Liveblogging: The Anglo-Saxon Chronicle: Gregory, Augustine, and Ceolwulf: "A.D. 596. This year Pope Gregory sent Augustine to Britain with very many monks, to preach the word of God to the English people...

Liveblogging: The Anglo-Saxon Chronicle: Ceawlin and Friends: "A.D. 568. This year Ceawlin, and Cutha the brother of Ceawlin, fought with Ethelbert, and pursued him into Kent. And they slew two aldermen at Wimbledon, Oslake and Cnebba...

Liveblogging: The Anglo-Saxon Chronicle: The Holy Pope Gregory, and Columba: "A.D. 560. This year Ceawlin undertook the government of the West-Saxons; and Ella, on the death of Ida, that of the Northumbrians; each of whom reigned thirty winters...

Duncan Black: In The Old Times: "I'm not one to defend the Bush administration, but they did at least attempt to color inside the lines, if in garish bloody colors. I'm sure Yoo's torture memo was quite a marvel of legal reasoning that only someone who went to the best law school could come up with (our best laws schools are churning out sociopaths, but still). At this point, the Trump administration is just saying 'we are going to continue doing crimes and you can't stop us and hahaha you aren't even trying'...

Sam Dangremond: Ken Griffin's 238 Million NYC Penthouse Is Most Expensive Home in America: "The penthouse at 220 Central Park South... $238 million.... At 953 feet, the 79-story tower stands out along the Central Park South skyline. Griffin's penthouse—a combination of two units—encompasses approximately 24,000 square feet, according to the Wall Street Journal. The $238-million price tag dwarfs the previous record of $137 million, which hedge-fund manager Barry Rosenstein reportedly paid for a home in East Hampton...

Jared Bernstein: More Evidence–This Time from CBO... Higher (Even Much Higher) Minimum Wages Largely Do What They’re Supposed To Do: "Raising the federal minimum wage to 15 per hour by 2025 would lift the pay of 27.3 million workers—17 percent of the workforce—according to a new report from the Congressional Budget Office. It would raise the incomes of poor families by 5 percent and thus reduce the number of people in poverty by 1.3 million. Since these low-end gains would be partially financed out of profits, the increase in the wage floor would reduce inequality. CBO also estimates that '1.3 million workers who would otherwise be employed would be jobless in an average week in 2025'.... The report warns that some will be hurt by the increase, but the best research suggests their job-loss estimate may be too high. Moreover, even if they’re right, the ratio of helped-to-hurt is 21 (27.3m/1.3m)...

David Byrne and Carol Corrado: Accounting for Innovations in Consumer Digital Services: IT Still mMatters: "Accounting for innovations in consumer content delivery matters: The innovations boost consumer surplus by nearly 1,800 (2017 dollars) per connected user per year for the full period of this study (1987 to 2017) and contribute more than 1/2 percentage point to US real GDP growth during the last ten...